2013–2015 Budget Address signed

13.07.2012

At a meeting with members of the Government and the Federal Assembly leadership Vladimir Putin announced that he has signed the 2013–2015 Budget Address. We offer you excerpts from the President's speach chosen by Yulia Mazur, Head of Accounting and Payroll.

... What do we propose? When planning the federal budget, it is expedient not to base the calculations on current or even projected price quotations, which are constantly changing, but on more fundamental indicators. Therefore, the budget will be based on the average oil price for the past five years, and every year the accounting period will be increased by one year. Thus, in five years the Russian budget will be calculated based on an average oil price for the ten-year period. If the actual price of oil is above the average, then the additional revenues should go to the Reserve Fund, and if the oil price falls below the average, the budget will use the Reserve Fund money to make up for the shortfall of oil and gas revenues.It is also necessary to legally establish the maximum size of the Reserve Fund, and any funds in excess of this amount should be forwarded to the National Welfare Fund. In addition, as I have said, we should consider a mechanism for using part of the National Welfare Fund to finance infrastructure and other priority projects. However, project financing using the NWF funds is possible only in excess of the amounts needed for transfers to the Pension Fund. It was for that purpose, to support the Pension Fund, that we established the National Welfare Fund some time ago. …

... Once again, the globalisation of world economy and an increasing competition for investment demand that we are competitive in everything. This is especially true of the investment climate. Its quality depends on our economic policy, our actions in the budget sector, and the stability and fairness of the tax system. We must have a clear understanding that the tax system not only performs fiscal functions, but also helps to diversify the economy and stimulate business activity.Given our goal to reduce dependence on natural resources, I think we must preserve the existing tax level for the non-resource sector. It would be short-sighted, irrational and dangerous to impose any further burdens on it. …

... I stress that today our tax rates are comparable to those of the countries with which Russia is competing for attracting capital. But the administration procedures must also conform to international best practices. At the same time, it is essential to exclude the conditions for tax evasion. Companies that do not pay their taxes destroy fair competition and undermine honest business practices.

Improving the quality of management will not only increase fiscal revenues, but also create reserves to reduce the existing tax burden on honest businesses. …

... Let me stress that the principle of equal opportunities for private, public, and municipal institutions must lie at the foundation of our steps. We need real competition in the public sector, including for budgetary funds. If a private institution is ready and able to provide a public service for the same amount of money but at a higher level of quality than public institutions, then that is where we must contract that service. It is the state’s obligation to allocate funds and pay for guaranteed services, but it is an individual’s right to select the institution where he or she can receive those free, guaranteed, high-quality state services.